Dhruti Khabaria-Mody
4/21/2015
I. Introduction
Rich's was a department store retail chain, headquartered in Atlanta, Georgia, operating in the southern U.S. Founded as the M. Rich Dry Goods in 1867, Rich’s grew into one of the most influential institutions in Atlanta’s history before it was finally absorbed into Macy’s on March 6, 2005. It evolved from modest beginnings to become a palace of commerce – a place to shop, enjoy lunch, and escape the monotony of everyday life into a world of fashion and beauty. The Rich’s story illustrates Atlanta’s and the South’s commercial and cultural development.
II. Building Customer Loyalty
The Pink Pig. The Great Tree. Legendary Customer Service. All of these terms evoke Atlanta’s most beloved department store. Rich’s built and maintained a special bond with customers in two key ways:
A. Customer Service
Rich's grew out of the ashes of the Civil War; mainly because of their merchandising efforts and their customer service. The Rich brothers understood that their customers were their business; and the more they catered to them, the bigger their business grew. In the 1920’s Rich’s implemented a very liberal exchange and credit policy where any item could be exchanged; and anyone could receive store credit – even if the item was not purchased at Rich's. Their belief that the customer is always right inspired customer loyalty. They divided the merchandise into separate areas with a clerk for each, thus, introducing the department store to Atlanta. The savvy Rich brothers developed a philosophy of commerce that emphasized a holistic and positive experience for the customer, recognizing that the sale of an item entails far more than just the exchange of money for goods. In its heyday in the early to mid-20th century, it wasn’t just a place to come buy things; it offered nearly every sort of service imaginable: child-care, a lending library, party planning, a gardening center, free classes in knitting, dressmaking, canning and bridge, all of them ensuring that Atlantans developed connections to the business.
B. Civic Responsibility
Rich’s and Atlanta clearly shared notions of progress, most significantly the idea that commercial success and economic development are unmitigated goods. Rich’s brother developed their successful business on their generous philosophy of business by understanding the importance of customer loyalty and the Jewish concept of Tzedakah, a concept of justice that includes act of pure charity. Rich’s was deeply commitment to the people both in the city and in the rural communities. Rich’s drew people into Atlanta which was a boon for the many smaller shops that had opened. In 1914, when the price of cotton dropped dramatically, they actually accepted bales of cotton as payment for merchandise. While they lost money on the transactions, it kept the cotton from rotting in the fields; and moved their merchandise that otherwise would have just sat there. And it brought the rural farm folks into town. Then during the Depression, when the city of Atlanta could not pay their teachers, Rich’s agreed to cash the teacher’s worthless paychecks; and hold them until the city could make good on them. They were a pioneer in civic involvement, endearing them to their customers.
III. Changing with the Times
Customer Service and Civic Responsibility are enduring elements in any successful retail business. However, they need to be modernized to succeed in today’s competitive retail atmosphere:
A. Customer Segmentation
Rich’s started out in a society with a relatively homogenized ideal of an aspirational lifestyle, enabled by the goods and services sold at their store. In addition, there was relatively lesser competition at the time. Consequently, a lot of marketing was by word-of-mouth, and great Customer Service went a long way in earning customer loyalty. In modern society, the consumer is highly segmented across, age, gender, education, culture, etc.